The SIMPLE-IRA Plan was designed to make it easier
for small businesses to offer a tax-advantaged,
company-sponsored retirement plan. The SIMPLE plan is a
flexible, easy to administer retirement plan for
businesses with 100 or fewer employees. SIMPLE plans are
funded by employer contributions and can be funded by
elective employee salary deferrals.
SIMPLE plan is a tax-favored retirement plan that
certain small employers (including self-employed
individuals) can set up for the benefit of their
employees.
A SIMPLE plan is a written agreement (salary reduction
arrangement) between an employer and an employee that
allows an eligible employee (including a self-employed
individual) to choose to:
Reduce his or her compensation by a certain
percentage each pay period, and
Have the employer contribute the salary reductions
to a SIMPLE IRA on behalf of the employee. These
contributions are called salary reduction
contributions.
All contributions under a SIMPLE IRA plan must be
made to SIMPLE IRAs, not to any other type of IRA.
